The recent surge in non-fungible tokens (NFTs) has primarily revolved around the concept of “ownership” concerning digital files like artwork and images. However, the application of NFTs in supply chain management raises pertinent questions about their relevance in real-world logistics.
NFTs, essentially coded strings granting ownership of a digital asset, may not directly correlate to copyright ownership or restrict access to purchased digital works available online. Despite this ambiguity, Shlomi Amouyal, Chief Technology Officer of Verte, a platform serving omnichannel retailers, contends that NFTs could serve a critical purpose in offering transparency throughout the supply chain.
According to Amouyal, when integrated with a blockchain, NFTs can play a pivotal role in tracking the status of products as they traverse the supply chain. Particularly beneficial for manufacturers employing a “just-in-time” model, the ability to monitor every component helps foresee and potentially mitigate disruptions to production.
The amalgamation of NFTs and blockchain technology presents an opportunity for enhanced supply chain visibility. Each NFT, stored on a decentralized ledger, can be linked to specific manufacturing orders, accompanying physical goods throughout their journey. This digital tag contains vital information, including product identity, origin, location, and condition, updated as the product moves, providing comprehensive tracking capabilities from production to end consumers.
Initially implemented in luxury goods due to their susceptibility to counterfeiting, NFTs could also benefit producers dealing in high-value materials for sophisticated applications like microprocessors and networking components. Amouyal envisions broader applications, including managing returns by tracking items from consumers back to warehouses and deciding on recycling, repair, resale, or disposal.
While NFTs offer potential advantages, challenges persist, akin to those faced by blockchain technology. Issues such as the time and cost required for data posting, the energy-intensive mining process to create blocks, and the substantial energy consumption associated with these activities remain concerns. Amouyal highlights the contrast between the energy usage in “proof of work” for mining and the less energy-intensive “proof of stake” used for validating NFTs.
Despite these challenges, Amouyal foresees NFTs playing a significant role in global supply chain management in the future. However, he acknowledges that widespread adoption by most companies will take time and requires further formalization within the industry.
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